There is no question the Volcker rule, the controversial measure to prohibit banks from trading for their own accounts, has been harmful to capital markets, said Randal Quarles, the Fedâs vice chairman for financial supervision, on Tuesday.

âThe extent of the effect on liquidity is something that economists do argue about, but that there is a consequence in simply that there is an excessive burden as a result of the Volcker rule, a great deal of uncertainty, a great of cost, I think that part is unarguable,â he said. The exchange took place during a hearing of the House Financial Services Committee.

Quarles said the Fed is working with four federal regulatory agencies to develop a revised Volcker rule proposal to reduce those burdens. He said he didnât want give details of the plans until an agreement was reached.

A recent study provided some evidence that the cost of trading distressed corporate bonds appeared to be higher after the Volcker rule was enacted. But this was not seen as a sign of systemwide stress, according to former Fed Vice Chairman Stanley Fischer.

Read: Biggest banks prefer full Volcker rule repeal, but a rewrite would do

The House last week passed legislation that would make the Fed the sole regulator in charge of the Volcker rule. The measure could be included in the bank regulatory reform legislation that has passed the Senate and has yet to be considered in the House.

Democrats said they were concerned that the Fed and the other regulators were moving to allow the return of at least some forms of proprietary trading.

Rep. Stephen Lynch, a Democrat of Massachusetts, said he was worried by the Fedâs plans to âstreamlineâ the rule.

âNo is no. There is no streamlining. We wanted it to stop, and it has stopped,â Lynch said of proprietary trading at banks.